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Alliance Gaming Results Up

21 April 2004

LAS VEGAS – (Press Release) -- Alliance Gaming Corporation (NYSE: AGI) today announced earnings for its third fiscal quarter ending March 31, 2004. Third quarter income from continuing operations totaled $12.2 million, or $0.24 per diluted share, on revenues of $116.2 million. For the comparable quarter ended March 31, 2003, the Company reported income from continuing operations of $8.9 million or $0.18 per diluted share, on revenues of $96.2 million. The results for the current quarter include Sierra Design Group (SDG) since the date of its acquisition on March 2, 2004.

Consolidated results for the March 31, 2004 quarter include:

* Revenues from continuing operations of $116.2 million, an increase of 21% from the $96.2 million in the prior year quarter.

* Operating income from continuing operations of $22.2 million, an increase of 9% from the $20.4 million in the prior year quarter.

* EBITDA from continuing operations of $30.3 million, an increase of 17% from the $25.9 million in the prior year quarter.

* Net income from continuing operations totaled $0.24 per diluted share, an increase of 33% from the $0.18 in the prior year quarter.

* Total net income, including discontinued operations, of $0.27 per diluted share, compared to $0.25 in the prior year quarter.

Earnings before interest, taxes, depreciation, amortization and before the $12.3 million refinancing charge incurred in the September 2003 quarter (EBITDA), and EPS excluding the refinancing charge, are not Generally Accepted Accounting Principles (GAAP) measurements. EBITDA may not be comparable to similarly titled measures reported by other companies. A reconciliation of EBITDA to income from continuing operations and a reconciliation of EPS excluding the refinancing charge to GAAP EPS are attached to this press release.

Cash and Capital Expenditures:

* As of March 31, 2004, cash and cash equivalents for our continuing operations totaled $32.5 million, which included approximately $2.1 million held for operational purposes in vaults, cages and change banks and $16.8 million held in jackpot reserve accounts. These amounts exclude cash and cash equivalents of the discontinued operations, which are included in assets held for sale.

* For the quarter ended March 31, 2004, consolidated capital expenditures for our continuing operations, including costs to produce proprietary games, totaled $16.2 million compared to $22.3 million for the prior year quarter. The current period capital expenditures were driven by the continued deployment of wide-area progressive and daily- fee games. We also incurred $5.0 million for capital expenditures for our discontinued operations.

Other financial highlights:

* During the quarter the Company completed the acquisition of SDG. Consideration consisted of approximately $28 million in cash, 662,000 shares of AGI common stock and the assumption of approximately $80 million of debt (including $72 million of loans payable to Alliance which now becomes inter-company debt), plus transaction fees and expenses, resulting in total initial consideration of $124 million. Additional contingent consideration of up to $95.6 million may become payable, in equal portions of cash and stock, over the next three fiscal years upon the SDG business unit achieving certain significant revenue and EBITDA targets.

* During the quarter the Company also completed the acquisition of MindPlay, a leading developer of advanced table game technologies, and the England-based Crown Gaming which is a cornerstone in our newly formed Bally Gaming and Systems UK Limited subsidiary.

* Net interest expense for the current quarter totaled $2.8 million compared to $6.2 million in the prior year period. The current period includes interest income on loans to SDG in the pre-acquisition period, totaling $1.5 million. The Company currently has $70.0 million outstanding on its $125 million revolving credit facility, unchanged from December 31, 2003. During the quarter the Company amended its bank credit agreement to reduce the Term Loan margin rate by 25 basis points, to LIBOR + 2.5%.

* The continuing operations tax rate of 34% for the quarter and 36% for the year-to-date period reflects the realization of research and development tax credits and a reconciliation of certain deferred tax assets and liabilities to the 2003 tax return.

Earnings Guidance

* The Company is reaffirming its fiscal year 2004 earnings guidance for continuing operations of $1.04 per diluted share (excluding the refinancing charge of $0.15 per diluted share). The comparative EPS for the prior fiscal year 2003 was $0.74.

* The Company is also reaffirming its fiscal year 2005 earnings guidance of at least $1.40 per diluted share, representing an increase of 35% compared to fiscal year 2004.

Bally Gaming and Systems Quarterly Revenues Increase 24%, Operating Income Increases 5%

Bally Gaming and Systems business unit reported a 24% increase in revenues over the prior year's quarter. Revenues from sales of gaming devices increased 5% over the prior year's quarter primarily as a result of a 9% decrease in new game sales, which was more than offset by an increase in the average new-unit selling price to $9,560 (excluding 250 OEM games).

A total of 1,250 units to be delivered in the March 2004 quarter were delayed until the June quarter at the request of three customers, due primarily to the delay in the completion of their new or expanded gaming facilities being constructed, creating a larger backlog going into June quarter. The increase in the average selling price includes the positive impact from the sale of 60 Monte Carlo premium-priced units as well as other premium-priced branded products.

Included in the Bally Gaming and Systems revenue discussed above is the revenue contribution from SDG, which totaled $15.2 million for the 29 days of March 2004. SDG's revenues included the sale of 590 devices in the Washington and Rhode Island markets, as well as recurring revenues from their daily-fee games discussed below.

Bally Systems revenues increased 44% over the prior year quarter with a 4% decrease in game monitoring units shipped, offset by a continued increase in the average selling price per unit, increased sales of software licenses for eTICKET(TM), the industry's leading single-wire TITO solution that is currently operating in 76 casinos, as well as sales of its bonusing and promotions software. Bally Systems recurring hardware and software revenues increased to $5.3 million, resulting from the larger installed base of game monitoring units, which currently stands at 265,000 units in 213 casinos world-wide.

Gaming Operations revenues increased 55% compared to the prior year's quarter. This increase was driven by increases in the daily-fee games deployed during the quarter led by the installation of a combined 1,710 video lottery terminals for the three racino properties that opened in New York during the quarter (820 Bally units, 890 SDG units). In addition to the New York placements, the gross placements for all other daily fee games totaled 1,630 units, and there were 890 units returned resulting in a 740 net increase in the installed base of games on a sequential basis as of March 31, 2004 compared to December 31, 2003. The base of recurring fee games now includes those from SDG, consisting of 10,700 in Washington and 4,200 Class II / central determination games primarily in Oklahoma and Florida, and 200 Raining Diamonds games.

The fees capitalized for regulatory approvals totaled $4.0 million year- to-date. Of these amounts incurred, the Company capitalized a total of $1.6 million during the March 2004 quarter, and amortization expense for these costs totaled $0.3 million for the quarter. No such costs were capitalized in the prior year.

Casino Operations

Rainbow Casino Quarterly Revenues Increase 3%, Operating Income Increases 6%

Rainbow Casino reported a 3% increase in revenue compared to the prior year quarter, and represents the fifth consecutive quarter of revenue growth following the remodeling project completed last year. Rainbow's EBITDA increased 8% to $5.8 million compared to the prior year quarter.

Discontinued Casino Operations

On December 8, 2003 the Company announced that it had entered into an agreement for the sale of its Rail City Casino for approximately $38 million. The sale is expected to close in May 2004. Accordingly the results of operations for Rail City have been reclassified as discontinued operations in both the current and prior year periods.

Discontinued Route Operations

For the Nevada route operations, revenue increased 14% and EBITDA increased 21% compared to prior year quarter. The average number of games deployed increased 5% over the prior year quarter and the average net win per day per gaming machine increased to $74 from $69.

The increase in revenues at VSI is due to an increase in net win per day per gaming machine to $71.10 from $60.50 and the number of units deployed increased by 5% compared to the prior year quarter.

The sale of both the Nevada Route and VSI are scheduled to occur before the end of the 2004 fiscal year.

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